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This Gourmet Grocer’s Failure Shows The Danger Of Overpromising Before The IPO


Gourmet Grocer Fairway Group filed for bankruptcy this week, just three years after its IPO and promises of expanding from 12 NY stores to more than 300 nationwide locations. The company’s farthest expansion before failing? Lake Grove, Long Island.

Overpromising had Fairway rush to put up new locations, and competition from the new stores, along with Whole Foods and Trader Joe’s, stole revenue from its established stores. The (organic, fair-trade) icing on Fairway's bankruptcy cake was grocery and meal-kit delivery services like FreshDirect and Blue Apron keeping potential shoppers on their couches.

“They had a great business going, with a great regional brand,” Brad Snyder, executive managing director at Tiger Capital Group, tells Bloomberg. “The IPO became a distraction for management and ownership, and the result of that was they felt compelled to grow at a rate that outpaced their execution abilities.”

The store’s bankruptcy filing reflects a change in the grocery landscape, as gourmet grocers like Whole Foods have taken root where Fairway used to be one of few, along with new cut-price entrants like Aldi (and Whole Foods, surprisingly) creating low-cost competition.